Kadin Issues Five Recommendations to Prevent Mass Layoffs and Industrial Relocation

The Indonesian Chamber of Commerce and Industry (Kadin) has issued a stark warning regarding the state of the national manufacturing sector, following the potential for mass layoffs at PT Feng Tay, a Nike supplier, and the planned relocation of Japanese automotive component companies from East Java to Vietnam. At PT Feng Tay in Bandung Regency, West Java, approximately 4,000 workers are threatened with job loss due to the completion of a shoe order contract without certainty of new orders, compounded by raw material distribution disruptions from global geopolitical conflicts. A similar crisis looms over the automotive industry in Pasuruan and Mojokerto, where two Japanese firms are reportedly planning to shift investment to Vietnam to focus on the electric vehicle ecosystem, driven by prolonged war disrupting global supply chains. Erwin Aksa, Vice Chairman for Organisation, Communication, and Regional Empowerment at Kadin Indonesia, stated that this phenomenon signals significant pressure on export-oriented industries. He noted that challenges include high logistics costs compared to competitor nations, regulatory inconsistency, and cost pressures from the weakening Rupiah exchange rate and high energy prices. Kadin emphasised the need for the government to take a proactive approach with companies at risk of reducing production or relocating, asserting that safeguarding existing investments must be a top priority to preserve jobs amid global economic uncertainty.